The energy crisis in the country seems
to be deteriorating with each passing day. The gas crisis that confronts this
nation is no less serious but the measures that are being taken by those at the
helm of affairs in the government, to deal with this grave problem, are grossly
insufficient.

Pakistan and Iran signed the Gas Sale
and Purchase Agreement (GSPA) in June 2009. The Government of Pakistan has
already made an assessment that natural gas imported from Iran would provide the
cheapest and perhaps the most suitable fuel for power generation. It has been
estimated that 750 mmcfd gas would help generate around 4,000 MW of electricity.

Pakistan's economic self-reliance
mainly depends on the self sufficiency in its energy requirements as those
provide oxygen for the national economy. The dream to bring prosperity in
Pakistan has been shattered by energy shortages, which are sinking the country
into the quicksand of poverty.

Pakistan's daily gas requirement is 6.5
billion cubic feet (BCF), against its current supply of 4 BCF, depicting a
shortfall of 2.5 BCF. It is predicted that Pakistan's domestic gas production
will fall from the current level of 4 billion cubic feet per day (cfd) to 2
billion cfd by 2020. Demand, on the other hand, is expected to soar to 8 billion
cfd by that time, creating a 6 billion cfd deficit.

It may be noted that Pakistan meets 85
per cent of its energy requirements through imported petroleum products,
resulting in a huge drain on foreign exchange.

Presently, the demand-supply gap in the
energy sector has reached one of its highest levels in the country. This gap
subsequently produced a huge shortage of power that has adversely affected the
economy. The crippling economy was further damaged when many industrial units
had to be shut down, rendering thousands of the skilled workers jobless. A
number of investors have relocated their units to Bangladesh to take advantage
of uninterrupted electricity supply and cheap labour. Consequently, this ongoing
chain-reaction of crises is accelerating inflation and contributing to a rise in
the cost of living to new heights. The gas shortage in the country is not an
over-night phenomenon as experts had predicted the imminent crisis well before
time, in 2006. Hagler Bailly, a global management consulting firm based in
Islamabad, released its study report in 2006 saying that Pakistan is going to
witness a gas shortage starting 2007, and the demand-supply gap will continue to
grow every year to stand-still the by 2025, when shortage will reach a level of
11,092 MMCFD (million standard cubic feet per day) against total 13,259 MMCFD
production.

The report added that Pakistan's gas
shortage would worsen in the next two decades if it did not manage to produce
energy from alternative sources. What we are experiencing today is the
vindication of Hagler Bailly who warned us as early as 2006.

However, no pragmatic steps have so far
been taken to resolve the gas shortage phenomenon which is aggravating with
every passing day.

Despite an early warning and a clear
indication of the hovering energy crisis, Pakistani authorities did not bother
to take a serious action against the threat which has fractured our industry and
exports. Under these circumstances, the significance of Pakistan Iran gas
pipeline project has increased manifold as it is the only viable option to
provide an extra amount of gas to the system. But it is unfortunate to observe
that lethargy; inaction and a sense of indecisiveness have collectively caused
an inordinate delay in the project and have further worsened the crisis. If
Pakistani leadership sincerely wanted to steer the country clear of the energy
crisis, it might have completed its part of the pipeline project and it could
have been functional today.

The authorities say that the project
will be completed by 2014 but the reality is that due to the slow pace of
progress on the Pakistani side that seems unlikely. Iran, on the other hand, has
undertaken its commitment by completing the laying of 1,000 kilometers up to the
Pakistani border.

The two sides signed an export deal in
2009 for Iran to supply natural gas to its eastern neighbour from 2014, with
sales to reach 750 million cubic feet (21 million cubic metres) to one billion
cubic feet per day by mid-2015. The finalised project, in 2007, included India
and Pakistan as the beneficiaries of the Iranian gas but India withdrew from the
project over pricing and security issues.

The US pressure on Pakistan to forego
the Iran-Pakistan (IP) gas pipeline project must be viewed in the context of the
ground realities. Its real purpose is to build up pressure on Iran more than
anything else. But if we give in to the US demand, it would have serious
(negative) consequences for Pakistan, which is facing serious energy crisis
because of electricity and gas shortages.

Also, from the economic point of view,
it seems appropriate for Pakistan to complete the Iran-Pakistan pipeline project
as early as possible to meet its fast-growing energy requirements. The alternate
project that would bring gas through pipeline from Turkmenistan (TAPI) doesn't
seem to see the light of completion, in the near future, because of the
continuing armed conflict in Afghanistan.

Energy is vital for economic progress
and prosperity. Had timely decisions were taken the situation would be different
today. The government needs to exploit all available resources to meet energy
requirements.